Delayed Effects of Graduate Education on Increased Productivity

John Simister

Abstract

‘Human Capital Theory’ shows that education is a vital part of improving productivity. This paper investigates effects of tertiary education (post-school education: at universities, higher-education colleges, and similar institutions) on how productive an employee is. A problem with such research is to identify which variable is the cause, and which is the effect. This paper uses time-series regression analysis of World Bank data, on the fraction of a country’s workforce with tertiary education, and productivity. This paper also uses Britain as a case study: the British Household Panel Study shows what happens to a graduate in the years after they leave university. The delayed effects of education on output makes clear that education is a cause (rather than an effect) of improvements in productivity. In conclusion, university-level education is beneficial to economic growth.

Department of Employment and Learning, 2009. The influence of graduate qualifications on average wages and productivity across the UK. UK government (Northern Ireland). Retrieved from: http://www.delni.gov.uk/report__graduate_productivity_final.pdf.pdf (Accessed date: 16 December 2013).

European Commission, 2010. An agenda for new skills and jobs: a European contribution towards full employment. Retrieved from: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0682:FIN:en:PDF (Accessed date: 11 April 2014).

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